There are actually very good reasons for keeping the group market. For example, many larger companies will be what is called "self-funded," meaning that they are actually fronting a large part of the healthcare costs for their employees, beyond just the premiums. This is a risk-sharing strategy, administered by the insurance companies, in exchange for lower overall costs to the company. But it has to be done on a per-company basis to optimize it.

Killing the group market could create certain efficiencies, but it would lose many others. And like you said, that is politically infeasible.

Other options, like looking at cross-state competition and capping certain medical expenses are likely better possibilities.